Splitmaster Stock Split Newsletter 2009-01-10

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Author: Mike Celeste		Editor: Tony Ponzo		January Circulation:

Stat Sheet Week Ending January 10th 2009


Changes	Weekly		December		4th Quarter		Year to Date
Indexes	Points	Percent	Points	Percent	Points	Percent	Points	Percent
Dow	-436.0	-4.8%	-53.0	-0.6%	-2,075.0	-19.1%	-4,489.0	-33.8%
S&P	-44.0	-4.7%	+7.0	+0.8%	-262.0	-22.5%	-565.0	-38.5%
NAS	-60.0	-3.7%	+41.0	+2.7%	-514.0	-24.6%	-1,075.0	-40.5%

Highlight of this past week: Indicator systems heats up this first week of the new year with wins on Mon., Tues. & Wed.

The Year Behind Us and the Year(s?) Ahead of Us.---

Before we get into the finance end of the newsletter, we would like to say that we had an extremely tragic situation very close to home, here in our neck of S. California. The Christmas Massacre was just a few blocks from our homes and some of our team members knew the victims (played golf together), or worked a couple of houses away. We are referring to the disgruntled husband that lost his divorce case, dressed up as Santa Claus and went to the ex-wife's large family gathering. The door was opened by an excited 8 yr. old girl, who was immediately shot in the face. Miraculously, she did survive. However, 9 other members of the family did not. 15 children are now left with losses of parents. The ex-husband also torched the house, with explosive fuel that was so bad it melted the Santa Claus outfit onto his skin. He was burned so badly he decided not to try to use his airline tickets to get away. He drove to his brother's house and killed himself. This is the sort of thing that puts everything into perspective. A vibrant family is gone----forever. A sick man is also gone, thank goodness. We that have lost some money during this bad market but we have lots more to be thankful about, and we know it. There was a fundraiser at a large local restaurant and we attended, along with many, many other people--along with TV coverage. Believe me, it makes you feel good to be able to do some small thing to help the survivors. Donations have come in from around the world--and I'm sure those donators have a good feeling for doing so. There, but for the grace of God, go I---such a fitting comment.

Moving to the financial part, we are making the first letter of the year sort of a review of the past and a guess at the future, so it is a slightly different format this time.

To say we were disappointed in the yearly split results would be putting it mildly. The figures look ok, but we have active splitters still on the books, well past their split date. The same comment applies to the Big Dipper System. Being very honest, we tried to beat the computer, and the cold, calculating computer was right---again. It did not pay to hold past the original sell dates, and most of our team members got out long ago. Smart people, our members--even tho not all of them did that. However, everything goes in cylces and we look forward to those splitters being held to come back this year.

To make up for the lack of action in the splitters, we worked hard on developing our day trading systems, and those results were really outstanding. We made over a 113% gain in the Momentum System. The Indicator System had 35 wins out of 44 plays, for an 80% win rate. We have continued the good results into 2009, with the Indicator plays winning 3 and losing none to start out the year. In fact, there were wins 3 straight days this week--Mon-Tues.-Wed. Admittedly, this takes more attention than the splitters, but the results seem to be worth it, and the feedback from team members is very encouraging. They are catching on to the new method of working immediately right on our site, with immediate postings of support and resistance levels for both stocks and options.

The past year was both fascinating as well as disappointing. While we have been hammering away at the impossibility of housing prices increasing forever with 100% loans and the lack of proving income, along with the reason for the oil price run up, we can't ignore the political elections. A quick mention of the mortgage sector because our partner, Tony C., the system developer for us, is getting involved in a big way. The FBI wants him to demonstrate his system for real estate fraud and class action attorneys are using him to find the illegal means by which foreclosures took place. Let me tell you, the amount of money involved is staggering---and because it is staggering, we have doubts that there will be a total attempt to unearth all of the faults. We were correct in predicting that the Treasury would bail out the banks with over 800 billion printed out for TARP and the pork measure thrown in, even tho the Senate held it up. We were correct in stating it was done too quickly, and we now see they didn't give us details that are coming back to haunt them. You can't put together a package that huge in a matter of days--and now they can't even account for exactly how it is being used. The big boys didn't do badly--as usual, with bonuses, golden parachutes, etc. We were also correct in predicting that the auto sector would get approval for their money, after the politicians acted so righteously for the benefit of the folks back home.
Another area we were correct in was the prediction that altho commodity prices for food had dropped big time (wheat dropped 60% from March-Dec.), we would not see our consumer food prices drop back down because the food retailers were going to make up for their rise in costs. Now they have lower costs--but guess what? Prices not only didn't drop, they are actually rising. Two examples--wheat dropped 60%, but Sam's Club raised their bread price 15%. Wait--that's not really the worst percent raise. Sam's Club carries white meat Tuna, Bumble Bee brand. The price for a 6 pack of 6 oz. each went from $7.73 to 10.38--and no, we aren't done yet--the size of the can was cut from the 6 oz. level to only 5 oz. Folks, that is a 60% raise in price. And they say there is no inflation. Most states and cities are in such bad financial shape they have already declared they are in crisis, with sales taxes being increased and the slippery folks we elect using all sorts of fee increases to avoid calling them taxes, which here in CA require 2/3 vote to change. Fee's don't require that much. All our utility bills are still rising. Then, that rough and tough battle we had over the speculation in oil has now taken another turn. The price here in CA was down to 1.59/gal for gas and in the last 3 weeks the price has been raised 25 cents a gallon, with little or no change in the oil price. How did that happen, you ask? The refineries here are cutting back on refining our gas so they can make more money--they are shipping gas out of state, where is doesn't have to meet our stringent environmental requirements. We are not going to win. The government wants to put a huge increase on the gas tax---I repeat, we are not going to win.

Here's my take on a main cause of the financial condition that we find our country in--and other countries around the world. Greed, one of those nasty 7 sins, grabbed hold of the people in control and they found they could make huge profits and commissions, and bonuses from putting out easy credit. As stated, buy a house with 100% loans and no proof of income. We all have known people that want to borrow money---how much interest will they pay? Any amount, if you will only make them the loan--because they know they can't pay it back. It's very difficult to turn down what is essentially free money. We've all seen the car ads--Bad credit, no problem, come on down and we will work out a plan for you. Easy credit crushed our economy, because now the debts can't be paid back. Not only can't they be paid back, there is not enough money floating around for consumers to spend on necessities. Cars, utilities, housing, food---all necessities. This is what worries me the most--how do we get back to replacing easy credit with enough income to afford necessities?

A bone-jarring statistic. When times were not as bad as they are now--and I'm talking about 1969--we saw that the Dow averages in 1969 were not matched again until 1982--that's 13 years, folks. I hate to bring this up again, but we have to be brutally aware of what is happening. Wait a minute !! Let's look for something encouraging. There is something--or rather it is someone. He is presently apparently wearing a cloak and his chest seems to have a big "S" on it. And really, I am not being funny here. We have a president-elect that has raised hopes so high that we eagerly look forward to his inauguration. So far he is saying a lot of good things, and the ANTICIPATION of his programs is holding this whole economy together--for at least the time being. He has been honest in saying it will be hard work and will take a long time, but people still believe that his stimulus package is going to turn everything around--creating jobs, fixing infrastructure, and restoring order to not only the US, but the whole world. Boy, am I pulling for him to pull it off. However, there are questions and problems to overcome before the stimulus package even gets approved. There are rumblings about it in Congress--can it be approved and approved quickly? Re the labor situation and all the jobs that are going to be created---can a truck driver be a bridge builder; can a man on the assembly line be a teacher--and so on and so on. Just think of
the re-training that needs to be done. Awesome. My ol' dad used to say that ANTICIPATION raised hopes far more than the reality, when it hit. The same for prices--example--when approval was given for gambling in Atlantic City, land prices went astronomical, only to be sold for far less when it came time to actually build casinos. They could build only so many casinos and there were far more land parcels than needed. Anticipation of what Obama can do--how will it match up to the reality? We are going to find out, and I think everyone wants him to be successful.

This is also the time of year we repeat another of ol' dad's favorites. Sell the market by the 10th of January, as all the good feelings from the Christmas and New Year's holidays starts to wear off. This year we may have started a bit earlier.. No doubt we had a good rally around those holidays. This first full week of 2009, tho, was a pretty good loser--and we made money on put options, by the way. Earnings will start to roll in next week, and it is also option expiration week, where we could see quite a bit of volatility. Hold on tho---do we have to be so pessimistic? The presidential inauguration is this month, and we have mentioned the extremely high hopes we have in this new leader. He has talked a good story before the election and has seemed to stick to his campaign words pretty darn close. We have ANTICIPATION and that could propel more good feelings into the market and give us a rise--even if it is rather temporary and short-lived. And maybe it won't be temporary. The odds say it will be a difficult battle, but that's what makes the odds--sometimes the long-shots do come in. Therefore---what I am saying is that I have no idea at all which way our economy and stock markets are going to go. How about that? There are some things I feel we have a good grasp on, like oil and mortgages with 100% loans (by the way, I'm still available for hire for a lot less than the greedy idiots that got us into this.)--and there are a whole lot of things that I know I'm not qualified to comment on (especially fixing things using my hands -- mechanical, carpenter and electical work, etc.) So right now, I'm keeping my fingers crossed and will continue to have faith that we will come out of this. Also, it is much more healthy to have faith than to be under stress all the time. One thing to remember. Every crisis this country has had in the past has always been followed by a recovery. So at some point, we will recover from this crisis too. In the meantime, we look for short term investing, going for profits either up or down until we see clearly that the worst is over.

Stay tuned..............

Today's Thought---
*****************
He who has health has hope; and he who has hope, has everything..........Owen Arthur (And boy, we are all going on lots of HOPE...mc)

Mike

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